Indonesia Macro Update - INF 03 Mar 2026
KBVS MACRO UPDATE
Tuesday, 3 March 2026
February CPI YoY Accelerates on Base Effects, Amid Rising Risks from Domestic Gold Prices
Indonesia’s headline inflation accelerated further to 4.76% YoY in Feb ’26 exceeding market expectations. The interplay between base effects, seasonal factors, and underlying core inflation trends will be critical in assessing the persistence of price pressures going forward. From a component perspective, core inflation increased to 2.63% YoY or 0.42% MoM, up from 2.45% YoY or 0.37% MoM in Jan ’26.
Looking ahead, seasonal demand related to Ramadan and Eid al-Fitr is expected to further lift food and transportation prices in Mar ’26. The interaction between demand-pull forces from THR-driven spending and cost-push pressures from external shocks increases the risk of temporary inflation overshooting during the festive period. Although year-to-date inflation remains manageable at 0.53% and core inflation is still relatively anchored, the upward trajectory of headline CPI signals growing near-term risks. To safeguard purchasing power and prevent second-round effects, such as wage adjustments and broader price mark-ups, Bank Indonesia is likely to maintain a cautious and pre-emptive stance.
Regards,
Fikri C Pemana, Khairunnisa N Syahfiraputri - KBVS Research Team